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Provenco Group announces strong first half

9 February 2005

Provenco Group announces strong first half on back of major business successes

Provenco Group Limited (NZX:PVO), a broad-based supplier of business technologies, today reported for the six months ended 31 December 2004, an 80% increase in its surplus before taxation and after goodwill amortisation (“operating profit”) and a 57% increase in sales revenue, compared to the corresponding prior period.

Chairman David Wolfenden says the company’s strong performance reflects its transformation into a broad-based business technology group. “In particular, the six month performance is the result of good growth in the international markets for Provenco’s world-leading retail forecourt solutions for the oil industry.

“It is backed up with a solid performance from the company’s domestic based businesses of store and warehouse automation solutions for the retail sector,” said Mr Wolfenden.
The operating profit for the six months to 31 December 2004 is $4.167 million ($2.316 million) in line with earlier market announcements. The sales revenue for the six months is $54.085 million.

6 months 6 months %
ended ended change
31-Dec-04 31-Dec-03
$millions $millions

Total Operating Revenue 54.085 34.373 57%

EBITDA 6.546 3.874 69%

Operating Surplus before Tax 4.167 2.316 80%

Net Surplus attributable to Shareholders 3.518 2.002 76% on the company’s first half performance, chief executive officer David Ritchie said the new outdoor payment hardware and software forecourt technologies for the retail oil industry in Malaysia continues to be an outstanding success.

“Provenco has provided the retail business of the national oil company of Malaysia, with the world’s first end-to-end smart card (EMV) compliant solution for this industry. This solution involved the installation of over 5,000 outdoor payment terminals across Malaysia before the end of December 2004, meeting all of the customer’s requirements.

“This is solid proof of the group’s ability to provide world class hardware and software solutions within timeframes demanded by blue chip customers,” said Mr Ritchie.

The surplus attributable to shareholders is $3.518 million, after unusual items of $122,000 and taxation charges of $535,000. This compares with a surplus of $2.002 million for the same period last year.
Mr Wolfenden said that Provenco’s previously announced anticipated full-year operating profit after goodwill amortisation and before unusual items and taxation, in excess of $6 million, remains.

“This would be 18% growth on last year’s operating profit of $5.1 million and would be the third year of growth in operating profit,” said Mr Wolfenden.
The market has previously been advised that the directors intend to pay a fully imputed dividend of three cents per share following the end of the 30 June 2005 financial year.

“The proposed dividend will be tax paid in the hands of New Zealand shareholders, utilising accumulated imputation credits. Shareholders will be given a choice of reinvesting through a dividend reinvestment plan or receiving a cash payment,” said Mr Wolfenden.

He said the group last paid a dividend in 1997 and the directors’ intention to pay a dividend is based on their expectation of delivery of international orders in the second half of the year and continued growth in the New Zealand business activities.

Commenting further on the company’s first half performance, Mr Ritchie said Royal Dutch/Shell group has contracted Provenco to provide their retail service station network in various countries within the Asia Pacific region with EMV compliant outdoor payment terminals. This work will commence with rollout of Provenco’s hardware and software solutions starting near the end of the current financial year. The majority of the terminal deliveries are expected to take place in the 2006 financial year.

Mr Ritchie said the group continues to pursue other international opportunities.

“The domestic businesses built around retail store automation and warehouse management systems including EFTPOS terminals have had a strong six months.

“The lead up to the mandated dates set in New Zealand for the change over of all EFTPOS terminals to the new smart card (EMV) compliant terminals has commenced and volumes of terminals delivered and installed for the six months has increased when compared to previous years.

Mr Ritchie said the group has been successful in winning the vast majority of the major retail chains replacement EFTPOS requirements to date.

“Retail store automation and mobility related products and solutions have also shown good growth in the six months. The acquisition of Transtech Distributors Limited in September 2003 has been an outstanding success with this business being the leading supplier of point of sale equipment in the New Zealand market.

“The recently announced acquisition of Sydney based Javelin Systems (Asia Pacific) Pty. Limited provides the group with a sound base with which to expand its mobile data management systems and services and scanning technologies into the Australian market. This signals the transformation to a group of businesses supplying broad based business technologies,” said Mr Ritchie.

In January 2005 the company also announced the appointment of Rick Christie as an additional independent director.

Mr Wolfenden said this valuable appointment broadens the depth of commercial experience both domestically and internationally at the Board level and strengthens our ability to continue to develop the Provenco Group into a leading supplier of business technologies.


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